How to Calculate an Annual Renewable Term Life Insurance Policy
Term insurance is the cheapest way to buy life insurance because you only pay for the cost of the insurance with no savings aspect. There are several types. Level premium term has a level cost for specified number of years. It's more expensive than renewable term the first years and less expensive in the later years. Another level term premium is a decreasing term policy where the coverage drops every year. Annual renewable term insurance is the most inexpensive type of term insurance. To calculate the premium, you must consider several factors.
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Instructions
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Consider your gender when you calculate an annually renewable term premium. The cost per thousand is more inexpensive for women because they live longer than men do on average. Just like other factors, the actuaries that help set the rate use this statistic.
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Look for your age if you have a chart with the premiums per thousand. The older you are, the closer you are to dying, so term insurance costs more. There's little difference in the very early years of life, but as you approach your 50's you'll notice the premium rises significantly each year. By the time you're 60 the jump is dramatic.
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Check with the insurance company for a list of ratable health conditions. Companies make you pay more if you have a disease that shortens your life span. Some of these conditions include cancer, heart disease, high blood pressure and COPD. That's just a sampling. In cases such as cancer, the longer you've been cancer free, the lower the cost of insurance. If you have controlled high blood pressure, you may not pay extra but simply not receive a preferred rate.
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Look at all your bad habits, avocations and vocation to find if you'll pay more. Smoking, for instance, prevents you from receiving a preferred rating, the lowest cost for term insurance, even if you're in perfect health. If you have a dangerous job or hobby, such as speedboat racing, you'll pay more per thousand dollars of coverage.
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Start losing weight if you want the lowest cost for insurance. That is, of course, if you're overweight. Obesity is the number one killer in America today because it leads to other serious conditions, besides the dramatic toll it takes on you body. However, if you're grossly thin, you will pay additional costs. The potential for serious underlying medical conditions exists as does malnutrition and the effects it has on your body.
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Decide the amount of insurance you'll need. Remember that the more you buy, the cheaper the premium is per thousand. If you purchase $100,000 of life insurance, it normally costs less than $95,000 because of the price break. You multiply the rate you found when you considered all the other factors times the number of thousands of dollars of insurance. If you selected $100,000 of insurance, you multiply by 100.
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Add-on the policy fee and any rider costs. Every policy has a policy fee, which usually runs around $25 to $30. Riders, such as waiver of premium, children insurance and spousal insurance, all have a cost, and sometimes a smaller rider fee similar to the policy fee.
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